What Is a Living Trust?
A living trust is a tool used in estate planning. The most common type is a revocable living trust, which lets you manage your assets while you are still alive and spell out how you want your money and property distributed when you die. Many people find a living trust better meets their goals and objectives than a traditional will.
- A living trust lets you avoid the probate process and the possibility that your assets will be frozen during the probate proceedings.
- A living trust may help you avoid some types of taxes.
- A living trust enables you to maintain more privacy than a traditional will.
What Are the Parts of a Living Trust?
While the components of a living trust may vary by jurisdiction, the essential parts are the same.
- The name of the person establishing the trust, known as the maker, trustor, grantor, or settler
- The name of the person responsible for managing the trust, called the trustee, and likely yourself while you are living
- The name of the person you want to be responsible for maintaining the trust after you die, known as the successor trustee
- The name of the beneficiaries, the people or entities to which you want to leave your money and property
- The name of the person you want to manage the trust on behalf of beneficiaries who are minors
Where Can I Get Help with Establishing a Living Trust?
While you are not legally required to hire an attorney to establish a living trust, it’s highly recommended. Mistakes in setting up a living trust can be expensive, so it’s best to get help from an experienced and knowledgeable lawyer. Estate law is subject to various state and local rules, so you want to work with someone who knows the procedures in your area and who specializes in estate planning. For example, states vary on how many witnesses must be present when you have the document notarized. Transferring assets into the trust can also be a complicated process, especially if real estate is involved.
The more complex your estate, the more you should consider hiring a wills and trusts lawyer, like a wills and trusts lawyer in Sacramento, CA. For example, if your plan includes a beneficiary with special needs, significant life insurance policies, or conditional gifts, you need a lawyer to make sure your wishes are carried out in the way that you want. While you pay for the professional’s services, the peace of mind you get from knowing the process is handled correctly is well worth the price.
Thanks to Yee Law Group, PC for their insight into forming a living trust.